Grant of Individual Exemptions; Tenneco, Inc., Health Care Plan

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 95-64; Exemption Application No. D-

09878, et al.]

Grant of Individual Exemptions; Tenneco, Inc., Health Care Plan

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

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SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) from certain of the prohibited transaction

restrictions of the Employee Retirement Income Security Act of 1974

(the Act) and/or the Internal Revenue Code of 1986 (the Code).

Notices were published in the Federal Register of the pendency

before the Department of proposals to grant such exemptions. The

notices set forth a summary of facts and representations contained in

each application for exemption and referred interested persons to the

respective applications for a complete statement of the facts and

representations. The applications have been available for public

inspection at the Department in Washington, D.C. The notices also

invited interested persons to submit comments on the requested

exemptions to the Department. In addition the notices stated that any

interested person might submit a written request that a public hearing

be held (where appropriate). The applicants have represented that they

have complied with the requirements of the notification to interested

persons. No public comments and no requests for a hearing, unless

otherwise stated, were received by the Department.

The notices of proposed exemption were issued and the exemptions

are being granted solely by the Department because, effective December

31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR

47713, October 17, 1978) transferred the authority of the Secretary of

the Treasury to issue exemptions of the type proposed to the Secretary

of Labor.

Statutory Findings

In accordance with section 408(a) of the Act and/or section

4975(c)(2) of the Code and the procedures set forth in 29 CFR Part

2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon

the entire record, the Department makes the following findings:

(a) The exemptions are administratively feasible;

(b) They are in the interests of the plans and their participants

and beneficiaries; and

(c) They are protective of the rights of the participants and

beneficiaries of the plans.

Tenneco, Inc. Health Care Plan (the Plan) Located in Houston, Texas

[Prohibited Transaction Exemption 95-64; Exemption Application No. D-

09878]

Exemption

The restrictions of sections 406(a), 406(b)(1) and (b)(2), and

407(a) of the Act shall not apply to the contribution to the Plan of

common stock (the Stock) of Tenneco, Inc. (Tenneco) by Tenneco or any

of its subsidiaries, provided the following conditions are satisfied:

(a) The Plan will dispose of the Stock received within 2 business days

of receipt, either by sale on the open market or by sale to Tenneco;

(b) any sale of the Stock from the Plan to Tenneco will comply with

conditions (1) and (2) of section 408(e) of the Act; and (c) Tenneco

will pay any and all transactional costs for any sales by the Plan on

the open market.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on May 22, 1995 at 60 FR

27124.

Written Comments: The Department received nine written comments and

numerous telephone inquiries with respect to the proposed exemption in

which the writers and callers sought additional information concerning

the proposed exemption. The Department provided this information by

telephone. In addition, the Department received one written comment

requesting that the Department deny the exemption application. The

commentator complained about the increase in his required contribution

to the Plan, and also stated that he disagreed with the applicant's

representation that the market price of the Stock will not be diluted

by the infusion of shares in the market as a result of the subject

transaction.

The applicant responded to this comment by stating that the

required increases in participants' contributions to the Plan were made

for legitimate business reasons and were unrelated to the transaction

which is the subject of the exemption request. With regard to the

commentator's second point, the applicant responded that the sale of

the Stock by the Plan should not lead to a dilution of the price of the

Stock because the volume of Stock passing through the Plan will be

relatively small. It is intended that the Plan will receive a

contribution from Tenneco (and sell each share immediately thereafter)

of approximately 691,000 shares of the Stock over a six-month period.

In 1994, the average daily trading volume of Stock on the New York

Stock Exchange was approximately 540,000 shares per day. Because the

number of shares involved in the subject transaction is relatively

small compared to the general trading volume of the Stock, the

applicant anticipates that there will be no effect on the market price

of the Tenneco shares.

The Department has considered the entire record, including the

comments submitted and the applicant's responses thereto, and has

determined to grant the exemption as it was proposed.

For Further Information Contact: Gary H. Lefkowitz of the

Department, telephone (202) 219-8881. (This is not a toll-free number.)

[[Page 39012]]

The Brown Group, Inc. 401(k) Savings Plan (the Plan) Located in St.

Louis, Missouri

[Prohibited Transaction Exemption 95-65; Exemption Application No. D-

09951]

Exemption

The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the

Act and the sanctions resulting from the application of section 4975 of

the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,

shall not apply to the guarantee (the Guarantee) by The Brown Group,

Inc. (the Employer), the sponsor of the Plan, of amounts due the Plan

with respect to a guaranteed investment contract issued by

Confederation Life (Confederation Life), including the Employer's

potential cash advances to the Plan (the Advances) pursuant to the

Guarantee and the potential repayment of the Advances (the Repayments);

provided that the following conditions are satisfied:

(A) No interest and/or expenses are paid by the Plan;

(B) The Advances are made in lieu of amounts due the Plan under the

terms of the GIC;

(C) The Repayments are restricted to cash proceeds actually

received by the Plan from Confederation Life or any other entity making

payment with respect to Confederation Life's obligations under the

terms of the GIC, or from the sale or transfer of the GIC to unrelated

third parties (the GIC Proceeds), and no other Plan assets are used to

make the Repayments; and

(D) The Repayments will be waived to the extent the Advances exceed

the GIC Proceeds.

For a more complete statement of the facts and representations

supporting this exemption, refer to the notice of proposed exemption

published on May 10, 1995 at 60 FR 24903.

For Further Information Contact: Ronald Willett of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

BlackRock Financial Management L.P. (BlackRock) Located in New York,

New York

[Prohibited Transaction Exemption 95-66; Application No. D-09963]

Exemption

The restrictions of sections 406(a)(1)(A) and 406(b)(2) of the Act

and the sanctions resulting from the application of section 4975 of the

Code, by reason of section 4975(c)(1)(A) of the Code, shall not apply

to the proposed cross-trading of equity or debt securities between

various accounts managed by BlackRock (the Accounts) where at least one

Account involved in any cross-trade is an employee benefit plan account

(Plan Account) for which BlackRock acts as a fiduciary.

Conditions and Definitions

This exemption is subject to the following conditions:

1. (a) A Plan's participation in the cross-trade program is subject

to a written authorization executed in advance by a fiduciary with

respect to each such Plan, the fiduciary of which is independent of

BlackRock;

(b) The authorization referred to in paragraph (a) is terminable at

will without penalty to such Plan, upon receipt by BlackRock of written

notice of termination; and

(c) Before an authorization is made, the authorizing Plan fiduciary

must be furnished with any reasonably available information necessary

for the authorizing fiduciary to determine whether the authorization

should be made, including (but not limited to) a copy of this

exemption, an explanation of how the authorization may be terminated, a

description of BlackRock's cross-trade practices, and any other

reasonably available information regarding the matter that the

authorizing fiduciary requests.

2. (a) No more than three (3) business days prior to the execution

of any cross-trade transaction, BlackRock must inform an independent

fiduciary of each Plan involved in the cross-trade transaction: (i)

that BlackRock proposes to buy or sell specified securities in a cross-

trade transaction if an appropriate opportunity is available; (ii) the

current trading price for such securities; and (iii) the total number

of shares to be acquired or sold by each such Plan;

(b) Prior to each cross-trade transaction, the transaction must be

authorized either orally or in writing by the independent fiduciary of

each Plan involved in the cross-trade transaction;

(c) If a cross-trade transaction is authorized orally by an

independent fiduciary, BlackRock will provide written confirmation of

such authorization in a manner reasonably calculated to be received by

such independent fiduciary within one (1) business day from the date of

such authorization;

(d) The authorization referred to in this paragraph (2) will be

effective for a period of three (3) business days; and

(e) No more than ten (10) days after the completion of a cross-

trade transaction, the independent fiduciary authorizing the cross-

trade transaction must be provided a written confirmation of the

transaction and the price at which the transaction was executed.

3. (a) Each cross-trade transaction is effected at the current

market value for the security on the date of the transaction, which

shall be, for equity securities, the closing price for the security on

the date of the transaction, and for debt securities, the fair market

value for the security as determined in accordance with paragraph (b)

of Rule 17a-7 issued by the Securities and Exchange Commission (SEC)

under the Investment Company Act of 1940 (the 1940 Act);

(b) The cross-trade transaction is effected at a price that: (1) in

the case of any equity security, is within 10 percent of the closing

price for the security on the day before the date on which BlackRock

receives authorization from the independent Plan fiduciary to engage in

the cross-trade transaction; and (2) in the case of any debt security,

is within 10 percent of the fair market value of the security on the

last valuation date preceding the date on which BlackRock receives

authorization by the independent Plan fiduciary to engage in the cross-

trade transaction as determined in accordance with SEC Rule 17a-7(b) of

the 1940 Act;

(c) The securities involved in the cross-trade transaction are

those for which there is a generally recognized market;

(d) The cross-trade transaction is effected only where the trade

involves less than five (5) percent of the aggregate average daily

trading volume of the securities which are the subject of the

transaction for the week immediately preceding the authorization of the

transaction. A cross-trade transaction may exceed this limit only by

express authorization of independent fiduciaries on behalf of Plans

affected by the transaction, prior to the execution of the cross-trade.

4. For all accounts participating in the cross-trading program, if

the number of units of a particular security which any accounts need to

sell on a given day is less than the number of units of such security

which any accounts need to buy, or vice versa, the direct cross-trade

opportunity must be allocated among the buying or selling accounts on a

pro rata basis.

5. (a) BlackRock furnishes the authorizing Plan fiduciary at least

once every three months, and not later than 45 days following the

period to which it relates, a report disclosing: (i) a list of all

cross-trade transactions engaged in on behalf of the Plan; and (ii)

with respect to each cross-trade transaction, the prices at which the

securities involved in the transaction were traded on the date of such

transaction; and

[[Page 39013]]

(b) The authorizing Plan fiduciary is furnished with a summary of

the information required under this paragraph 4(a) at least once per

year. The summary must be furnished within 45 days after the end of the

period to which it relates, and must contain the following: (i) a

description of the total amount of Plan assets involved in cross-trade

transactions during the period; (ii) a description of BlackRock's

cross-trade practices, if such practices have changed materially during

the period covered by the summary; (iii) a statement that the Plan

fiduciary's authorization of cross-trade transactions may be terminated

upon receipt by BlackRock of the fiduciary's written notice to that

effect; and (iv) a statement that the Plan fiduciary's authorization of

the cross-trade transactions will continue in effect unless it is

terminated.

6. The cross-trade transaction does not involve assets of any Plan

established or maintained by BlackRock or any of its affiliates.

7. All Plans that participate in the cross-trade program have total

assets of at least $25 million.

8. BlackRock receives no fee or other compensation (other than its

agreed upon investment management fee) with respect to any cross-trade

transaction.

9. BlackRock is a discretionary investment manager with respect to

Plans participating in the cross-trade program.

10. For purposes of this exemption:

(a) ``Cross-trade transaction'' means a purchase and sale of

securities between accounts for which BlackRock or an affiliate is

acting as an investment manager;

(b) ``Affiliate'' means any person directly or indirectly through

one or more intermediaries, controlling, controlled by, or under common

control with BlackRock;

(c) ``Plan Account'' means an account holding assets of one or more

employee benefit plans that are subject to the Act, for which BlackRock

acts as a fiduciary.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on June 7, 1995, at 60 FR

30111.

For Further Information Contact: Mr. E.F. Williams of the

Department, telephone (202) 219-8194. (This is not a toll-free number.)

General Information

The attention of interested persons is directed to the following:

(1) The fact that a transaction is the subject of an exemption

under section 408(a) of the Act and/or section 4975(c)(2) of the Code

does not relieve a fiduciary or other party in interest or disqualified

person from certain other provisions to which the exemptions does not

apply and the general fiduciary responsibility provisions of section

404 of the Act, which among other things require a fiduciary to

discharge his duties respecting the plan solely in the interest of the

participants and beneficiaries of the plan and in a prudent fashion in

accordance with section 404(a)(1)(B) of the Act; nor does it affect the

requirement of section 401(a) of the Code that the plan must operate

for the exclusive benefit of the employees of the employer maintaining

the plan and their beneficiaries;

(2) These exemptions are supplemental to and not in derogation of,

any other provisions of the Act and/or the Code, including statutory or

administrative exemptions and transactional rules. Furthermore, the

fact that a transaction is subject to an administrative or statutory

exemption is not dispositive of whether the transaction is in fact a

prohibited transaction; and

(3) The availability of these exemptions is subject to the express

condition that the material facts and representations contained in each

application accurately describes all material terms of the transaction

which is the subject of the exemption.

Signed at Washington, D.C., this 26th day of July 1995.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 95-18718 Filed 7-28-95; 8:45 am]

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